Granite State Concrete v. Surface Transp., 04-2551.

• Decision Date: 29 July 2005
• Docket Number: No. 04-2551.,04-2551.
• Citation: 417 F.3d 85
• Parties: GRANITE STATE CONCRETE CO., INC., Milford Bennington Railroad Co., Inc., Petitioners, v. SURFACE TRANSPORTATION BOARD, Respondent. Boston and Maine Corporation; Springfield Terminal Railway Company, Intervenors.
• Court: U.S. Court of Appeals — First Circuit

417 F.3d 85

GRANITE STATE CONCRETE CO., INC., Milford Bennington Railroad Co., Inc., Petitioners, v. SURFACE TRANSPORTATION BOARD, Respondent Boston and Maine Corporation; Springfield Terminal Railway Company, Intervenors.

No. 04-2551.

United States Court of Appeals, First Circuit.

Heard June 7, 2005.

Decided July 29, 2005.

COPYRIGHT MATERIAL OMITTED

James E. Howard, for petitioners.

Jamie P. Rennert, Attorney, Surface Transportation Board, with whom R. Hewitt Pate, Assistant Attorney General, Makan Delrahim, Deputy Assistant Attorney General, Robert B. Nicholson, Attorney, Department of Justice, John P. Fonte, Attorney, Department of Justice, Ellen D. Hanson, General Counsel, and Craig M. Keats, Deputy General Counsel, were on brief, for respondent.

Eric L. Hirschhorn, with whom Winston & Strawn LLP and Robert B. Culliford, Guilford Rail System, were on brief, for intervenors.

Before SELYA, Circuit Judge, HILL,^* Senior Circuit Judge, and LYNCH, Circuit Judge.

LYNCH, Circuit Judge.

At issue is an order of the Surface Transportation Board (STB) finding that one railroad acted reasonably in light of rail safety concerns when it imposed restrictions upon another railroad operating on its lines.

The petitioners in this case are the railroad subjected to restrictions, the Milford-Bennington Railroad Company (MBRR), and its only customer, the Granite State Concrete Company (Granite State). The respondent is the STB. The intervenors are the other railroad which imposed those restrictions, the Boston and Maine Corporation, and Springfield Terminal Railway Company, two subsidiaries of Guilford Transportation Industries (collectively referred to as "Guilford").

MBRR petitions for review of the STB's final order, which rejected MBRR's claims 1) that Guilford unreasonably interfered with MBRR's ability to service Granite State in violation of 49 U.S.C. § 10702, and 2) that Guilford failed to meet its own service obligation to MBRR, in violation of 49 U.S.C. § 11101. The STB found that restrictions were indeed imposed by Guilford but were not unreasonable given safety concerns and the information available to Guilford, and that Guilford did not fail to meet its service obligations. Granite State Concrete Co., STB Docket No. 42083, 2004 WL 2138195 (served September 24, 2004) (Granite State II).

To prevail, MBRR must convince us that the STB's findings and conclusions were "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 5 U.S.C. § 706(2). We summarize MBRR's arguments and our responses. MBRR argues that there were no plausible safety issues (untrue on the face of the record); that the STB was required to ask another agency to determine if there were any safety issues (not so); that the STB failed to follow its own precedents (none were binding or even applicable); that the STB's exuberant language in its order establishes that the STB abandoned its usual reasonableness standard of review for a new ad hoc "not necessarily unreasonable/not so egregious" standard of review (while the STB should be more precise, it did not apply the wrong standard of review); that the STB ignored relevant facts (we are unconvinced); and that the STB, having found petitioners had been harmed, was required as a matter of law to award damages (there is no such requirement). The STB order was far from arbitrary or capricious; it was a sensible resolution of the case before it.

I.

We recount the facts as found by the STB and shown by the record.

Guilford¹ owns the first 16.36 miles of a 34.9-mile rail line running northwest from Nashua to Bennington, New Hampshire. The other section of the line—miles 16.36 to 34.9—is owned by the state of New Hampshire and leased by petitioner MBRR.

Petitioner Granite State operates a stone quarry north of Wilton, New Hampshire, and a stone processing center located several miles to the south, in Milford, New Hampshire. Both communities lie along the rail line. MBRR transports Granite State's crushed stone from the Wilton quarry to the Milford processing center; indeed, MBRR's only shipping customer is Granite State. The first part of the shipping route lies on MBRR's section of the line. The last three miles of the route, approximately, is on Guilford's portion of the track. In order to serve Granite State, MBRR has trackage rights which permit it to use Guilford's line to finish the journey to Milford.

The problem here started with MBRR's decision in 2002 to contract with a scenic railroad, Wilton Scenic Railroad (Wilton Scenic), to run sight-seeing passenger trains over its own tracks adjacent to the Guilford line. Those operations began on May 17, 2003. Even before these operations started, Guilford and MBRR were at odds about them. As the STB found:

Wilton Scenic uses passenger cars that are stored on [MBRR] track near the point where the [MBRR] line and the [Guilford] line connect. At that point, there is a steep downhill grade that continues over the length of the [Guilford] track. The existence of this grade, along with the presence of Wilton Scenic's passenger equipment, apparently raised safety concerns for [Guilford]. After [Guilford] and [MBRR] failed to reach a meeting of the minds about how to deal with those concerns, [Guilford] installed a "derailment device," first on the [MBRR] side of the point where the lines connect and subsequently, after [MBRR] allegedly refused to activate the first derailment device, on the [Guilford] side of the point of connection. The derailment device has the effect of requiring [MBRR] to stop its trains before they move onto [Guilford]'s line.

Granite State II, 2004 WL 2138195, at *1.²

Both sides had problems. Guilford, having examined the site more closely, had concerns that the Wilton Scenic cars or freight cars could break free and roll down the .75 to 1.5% downhill grade on the track leading into the MBRR/Guilford junction onto its tracks and cause injury and damage. After all, MBRR did not continuously monitor the site and there had been an earlier incident of a trespasser on MBRR's tracks causing an accident with a small rail inspection car which had resulted in serious injury.

MBRR also had a problem because the derailment device required its train to stop, and the engineer to get out to trip and reset the device each time the train passed over it. This in turn slowed down the schedule,³ and this was an important issue because Granite State had been given only limited hours to operate by the town of Wilton.⁴ Further, Wilton Scenic thought the continued use of the derailment device would be infeasible once it expanded its operations from the weekends to weekdays, as it planned to do. It appears that MBRR engaged in some self-help: MBRR left the device open when its freight trains were running and sometimes even removed this derail device without notifying Guilford. Guilford first discovered that the derail device was not being used properly on June 19, 2003, when Guilford conducted an inspection of the MBRR/Guilford intersection in response to Wilton Scenic's request for all three carriers to meet and come up with a plan to resolve safety concerns.

Given MBRR's refusal to keep or use the derail device on the MBRR side of the intersection (and its refusal to tell Guilford), Guilford decided that to ensure safe operation, it needed to completely separate the operations of MBRR and Guilford over the Guilford line. It implemented a number of measures to accomplish this goal. Only one—a limited time window for MBRR's use of Guilford's line—is the focus of the petitioners' arguments to this court.

Starting on June 20, 2003, MBRR was given the window from 1 a.m. to 8 a.m. each day to operate its trains.⁵ Guilford explains that the nighttime window for MBRR was designed to make sure MBRR and Guilford trains and maintenance crews were never on Guilford's tracks at the same time and to allow Guilford, the owner of the track, to inspect and maintain the tracks during the day.

This operating window, combined with the hours limitation on the Granite State quarry, reduced MBRR's service to only one trip a day. MBRR believed that it could not operate its trains at the Granite State quarry outside the quarry's normal operating hours. Guilford was not initially aware of the permitting restrictions on Granite State and, in any case, did not understand that MBRR could not operate outside Granite State's operating hours.

On June 27, 2003, MBRR and Granite State requested informal assistance from the STB's Office of Compliance and Enforcement in resolving this dispute. MBRR explained that the operating window was preventing it from effectively serving Granite State (though service never ceased). Guilford disputed this claim and offered to temporarily serve Granite State itself, pending resolution of the dispute, based on the STB's determination of "reasonable terms and conditions" for service. Granite State and MBRR refused Guilford's offer.⁶

Once MBRR made clear why the 1 a.m. to 8 a.m. operating window caused it difficulty in serving Granite State, Guilford, on July 8, offered to change the operating window to between 4 a.m. and 1 p.m. Guilford explained that this new window should allow MBRR to make more round trips between the two Granite State facilities each day, give Guilford enough time to serve its customers, and still keep the operations of the two railroads separate to address its safety concerns. On July 11, Guilford informed MBRR that the new operating window from 4 a.m. to 1 p.m. would go into effect starting July 15, 2003. MBRR concedes that the new window allowed MBRR to complete two round trips on most days.

Still dissatisfied with the new window, MBRR and Granite State filed a formal complaint with the STB on July 14, 2003, claiming that Guilford's actions (poor maintenance, installation of the derail device, instituting the operating window) caused MBRR and Granite State to only be able to...